India · Delayed Price · Currency is INR Equitas Small Finance Bank Earnings Call Transcripts
Fiscal Year 2026
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Q4 FY26 delivered record profitability, robust advances growth, and improved asset quality, with NIM rising to 7.29% and ROA at 1.46%. Guidance for FY27 includes 20%+ advances growth, stable NIM near 7%, and ROA of 1.2%-1.25%, while monitoring inflation and geopolitical risks.
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Q3 FY26 saw strong advances and disbursement growth, improved asset quality, and a stable NIM, with ROA impacted by a one-time labor code provision. Guidance remains positive for ROA, credit cost, and cost-to-income, with capital adequacy robust and no near-term capital raise planned.
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Q2 FY26 saw a return to profitability with improved asset quality, strong growth in non-MFI segments, and a stable capital position. NIM is expected to recover, credit costs to normalize, and advances growth to exceed 20% next year, supported by robust internal and market drivers.
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Q1 FY26 saw a net loss due to upfronted provisions, but core operations remained strong and secured lending grew robustly. Credit costs are expected to normalize by year-end, with asset growth and ROA guidance maintained. Capital adequacy remains strong.
Fiscal Year 2025
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FY25 saw high credit costs in microfinance, reducing profitability and prompting a strategic shift to lower-risk segments. Non-MFI advances grew strongly, and management expects credit costs to normalize and ROA to exceed 1% by Q4 FY26, targeting 1.5–1.7% by FY27.
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Q3 saw continued stress in the MFI portfolio, with collection efficiency at 98.2% and elevated credit costs expected to persist. Secured lending segments like SBL and vehicle finance showed robust growth, while the bank's deposit franchise and digital initiatives strengthened overall resilience.
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Strong retail deposit growth and robust performance in small business and vehicle finance offset ongoing stress in the microfinance portfolio, which saw elevated provisions and slippages. Cost-to-income remains high due to investments, but asset quality outside microfinance is stable.
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Retail deposit and loan growth remained strong, but microfinance stress led to elevated credit costs and slippages. Guidance for loan growth is maintained at 25% for FY25, while credit cost guidance is deferred pending clarity on microfinance trends.